Correlation Between Empire State and Sun Life
Can any of the company-specific risk be diversified away by investing in both Empire State and Sun Life at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Empire State and Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Sun Life Financial, you can compare the effects of market volatilities on Empire State and Sun Life and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Empire State with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Sun Life.
Diversification Opportunities for Empire State and Sun Life
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Empire and Sun is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial and Empire State is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Empire State Realty are associated (or correlated) with Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Empire State i.e., Empire State and Sun Life go up and down completely randomly.
Pair Corralation between Empire State and Sun Life
Given the investment horizon of 90 days Empire State is expected to generate 4.01 times less return on investment than Sun Life. But when comparing it to its historical volatility, Empire State Realty is 1.19 times less risky than Sun Life. It trades about 0.13 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 4,977 in Sun Life Financial on September 1, 2024 and sell it today you would earn a total of 773.00 from holding Sun Life Financial or generate 15.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Empire State Realty vs. Sun Life Financial
Performance |
| Timeline |
| Empire State Realty |
| Sun Life Financial |
Empire State and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Sun Life
The main advantage of trading using opposite Empire State and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Sun Life can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sun Life will offset losses from the drop in Sun Life's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Sun Life vs. Sunstone Hotel Investors | Sun Life vs. China Resources Beer | Sun Life vs. Suntory Beverage Food | Sun Life vs. BOSTON BEER A |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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